What was Charlie Munger's preferred equity structure in corporate governance?

Charlie Munger's Views on Share Structure in Corporate Governance

Hey, that's quite an interesting question! I've always been fascinated by Munger and Buffett's investment philosophies. As Vice Chairman of Berkshire Hathaway, Charlie Munger has spent decades managing the company alongside Warren Buffett, developing profound insights into corporate governance. Simply put, Munger favors a single-class share structure (where all shares carry equal rights) over dual-class structures that grant founders and executives disproportionate control. Let me break down why he holds this view and how it plays out in practice.

What is Share Structure?

First, some basics to avoid abstraction:

Single-class share structure: The company issues only one class of stock. All shareholders enjoy roughly equal voting rights and economic interests. Influence corresponds to ownership stake, with no artificial "privileges."
Dual-class (or multi-class) structure: Common in tech companies like Google or Facebook. Shares held by founders/executives (e.g., Class B) carry superior voting power, enabling control despite smaller ownership. This protects founder control but may marginalize minority shareholders.

Munger dislikes dual-class structures, believing they undermine governance fairness, empower management to act unchecked, and harm long-term value creation.

Why Does Munger Prefer a Single-Class Structure?

Based on Munger’s interviews and Berkshire’s annual reports, his key arguments are:

Emphasis on equality and trust: Munger believes great companies treat all shareholders as partners. A single-class structure levels the playing field, preventing minority dominance. He often states corporate governance should follow the "Golden Rule"—treat others as you wish to be treated.
Avoiding short-termism: Dual-class structures may incentivize founders to chase short-term gains (e.g., risky expansion). Munger and Buffett prioritize long-term stability, arguing single-class structures enable collective shareholder oversight for better decision-making.
Berkshire as proof: Consider Berkshire Hathaway itself! It maintains a single-class ethos (though it offers Class A and B shares, Class B has reduced voting power primarily for affordability—core equality remains). Munger and Buffett hold significant stakes but never use privileged shares, demonstrating that control stems from ownership, not artificial design.

Munger has publicly criticized dual-class companies. For example, he called Snapchat’s (Snap Inc.) extreme dual-class structure—granting near-permanent founder control—"morally bankrupt" for disenfranchising investors.

What Does This Mean for Ordinary Investors?

If you’re an individual investor, Munger’s view reminds us: scrutinize a company’s share structure. A single-class structure often signals management’s commitment to all shareholders’ interests, resisting minority manipulation. Berkshire itself exemplifies this—decades without dividends, yet generating wealth through compounding.

Of course, exceptions exist—some dual-class companies succeed. But Munger’s experience suggests equitable structures prove more reliable long-term. For deeper insights, I recommend Munger’s book Poor Charlie’s Almanack, packed with his candid, down-to-earth takes on governance.

Feel free to ask follow-ups! I’m no expert, but years of investing by their principles have taught me plenty!